Cowabunga System Daily Update: Monday, 03/01/10

The CFTC may be changing the rules for retail traders in the US. This affects many of us in a negative way and we need your help getting our voices heard.

Read more of the details

I can not find better words to describe my position on all this than those from Andrei Pehar, Chief Currency Strategist at fxKnight.com.  

Andrei says: "I am not opposed to regulation nor regulatory agencies. But that regulation needs to be fair, transparent, and open to public input. Otherwise it becomes corrupt and self-serving. Sure high leverage can get you into trouble if used thoughtlessly. Sure hedging when not done properly turns one loss into two. But I believe the cure is EDUCATION, not restricting what people can and cannot do with their investment decisions. Guide, don’t dominate – government was invented to protect people and their property, not to limit their potential.

We at BabyPips.com disagree with the CFTC proposal.

If you disagree as well, you may submit your comments to secretary@cftc.gov.  

Include “Regulation of Retail Forex” in the subject line of the message and the identification number RIN 3038-AC61 in the body of the message. Please, help us to spread the word!

I think this is a very important matter that affects us all, and we should try our hardest to ensure that things will be done for the best of the trading community.

If this is your first time visiting this blog, read this first! 

Main Trend

Current Trend

The trend stayed down the entire day.

Today I only looked for short trades.

News events to watch for today :

  • 4:30am EST- UK Manufacturing PMI
  • 8:30am EST- US Core PCE Price Index m/m
  • 10:00am EST- US ISM Manufacturing PMI

Today’s Surf

4:45am EST- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending up and MACD was positive and losing value. This was a valid entry.

The entry was at the close of the candle at 1.5130 with a stop at the most recent swing high at 1.5179. Since I was 30 pips away from the nearest 50 or 00 level, I decided to put my initial target at 1.5100.

Entry: Short at 1.5130 Stop: 1.5179 Target: 1.5100

5:00am EST- My target was hit. Price made a clean break so I moved my stop to 1.5100 and set my next target for 1.5050.

5:15am EST- My target was hit. Price made a clean break so I moved my stop to 1.5050 and set my next target for 1.5000.

5:30am EST- My target was hit. Price made a clean break so I moved my stop to 1.5000 and set my next target for 1.4950.

6:15am EST- My target was hit. This time the price didn’t make a clean break so I took my final profit. I exited at 1.4955.

10:15am EST- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending up and MACD was positive and losing value.. This was a valid entry.

The entry was at the close of the candle at 1.4896 with a stop at the most recent swing high at 1.4949. Since I was 46 pips away from the nearest 50 or 00 level, I decided to put my initial target at 1.4850.

Entry: Short at 1.4896 Stop: 1.4949 Target: 1.4850

11:00am EST- Unfortunately I got stopped out of my trade.

entry2

Trade Result: +175 -53 = +122 pips (NOT INCLUDING SPREAD) R-Multiple: 3.57; -1.00

News events to watch for Monday:

  • 4:30am EST- UK Purchasing Manager Index Construction

For a complete list of news events check out our Forex Economic Calendar.
Questions? Read the Cowabunga FAQ.

Want to discuss the Cowabunga System? Visit our Forex Forums.

14 comments

  1. bigblackfeet

    Hi, Congratulations and thanks. I made “only” 55 pips…hence, if you please, my first question : What do you call a “clean break” and second question Why do you ALWAYS say the “sto is climbing up” while it is obviously going down … as you mention on the chart ?
    TIA
    Best Regards
    BBF

    Reply
  2. bigblackfeet

    Hi, Congratulations and thanks. I made “only” 55 pips…hence, if you please, my first question : What do you call a “clean break” and second question Why do you ALWAYS say the “sto is climbing up” while it is obviously going down … as you mention on the chart ?
    TIA
    Best Regards
    BBF

    Reply
  3. jpiper

    My question is similar- In the description of your system, the condition for long trades is “stochastics heading higher”, and for short trades, “stochastics heading lower”. But when you describe actual trades you enter, you describe as a valid criteria “stochastics heading up” for a SHORT trade, and “stochastics heading down” for a LONG trade.

    Dude, so tell me, which way is up, eh?

    Reply
  4. gabriel888

    Hi Pip Surfer,
    I understand that from e 4-hr. chart, GBP is already over-sold accordin’ to RSI n’ Stochastic..
    In that case, do we still continue to look for down-trend opportunities??
    It has already dropped over 300 pips on 1st March n’ it seems pretty scary ya’..
    In such scenerio, do we still stick to e plan n’ continue to short??
    Thanks, Gabriel.

    Reply
  5. jpiper

    My question is similar- In the description of your system, the condition for long trades is “stochastics heading higher”, and for short trades, “stochastics heading lower”. But when you describe actual trades you enter, you describe as a valid criteria “stochastics heading up” for a SHORT trade, and “stochastics heading down” for a LONG trade.

    Dude, so tell me, which way is up, eh?

    Reply
  6. jeroenvandervelden

    Hi Pip Surfer, I’ve got a ‘bit of a strange question’ about the entrypoint, Let say you missed a valid entry point for whatever reason…. But the trade retraces after lets say 2 bars and it hits the initial entry point again. Is it ok to enter again?

    Reply
  7. gabriel888

    Hi Pip Surfer,
    I understand that from e 4-hr. chart, GBP is already over-sold accordin’ to RSI n’ Stochastic..
    In that case, do we still continue to look for down-trend opportunities??
    It has already dropped over 300 pips on 1st March n’ it seems pretty scary ya’..
    In such scenerio, do we still stick to e plan n’ continue to short??
    Thanks, Gabriel.

    Reply
  8. Pip SurferPipSurfer

    @bigblackfeet- A clean break is when your target is hit and momentum is strong in the direction of your trade. You can move down to a lower timeframe chart to use indicators to help you, but alot of times you can just watch the price action. Remember that the targets aren’t set as limit orders. They are mental targets that I watch if the price hits that point. Once it hits, I watch it to see what my next move will be. As for your 2nd point, I’m not sure what you mean? I said stochastics were climbing up? If I did, that is an error. For a short trade, stochastics must be moving down. Please clarify for me.

    @jpiper- I double checked the description page for the Cowabunga system and it says stochastics heading higher for LONG trades, and stochastics heading lower for SHORT trades. I’m not sure if you misread it but as far as I know, the rule page is correct. Again to clarify, stochastics must be heading up for a long trade, and must be heading down for a short trade.

    @gabriel888- You make a good point and I like that you are looking at the overall picture. However, this system has been tested in all kinds of market conditions and while we may be catching the very end of a trend it’s still important to follow the rules to the system. We may not win as much but then again who knows if the trend is really over? We could win alot more! The system will keep you from losing too much so even if we take a string of losses, we’ll still be ok in the long run.

    @jeroenvandervelden- I don’t see why not, as long as its the same entry price or better. Just make sure you don’t enter before a news candle.

    Thanks for the comments everyone. Happy trading!

    Reply
  9. jeroenvandervelden

    Hi Pip Surfer, I’ve got a ‘bit of a strange question’ about the entrypoint, Let say you missed a valid entry point for whatever reason…. But the trade retraces after lets say 2 bars and it hits the initial entry point again. Is it ok to enter again?

    Reply
  10. Pip SurferPipSurfer

    @bigblackfeet- A clean break is when your target is hit and momentum is strong in the direction of your trade. You can move down to a lower timeframe chart to use indicators to help you, but alot of times you can just watch the price action. Remember that the targets aren’t set as limit orders. They are mental targets that I watch if the price hits that point. Once it hits, I watch it to see what my next move will be. As for your 2nd point, I’m not sure what you mean? I said stochastics were climbing up? If I did, that is an error. For a short trade, stochastics must be moving down. Please clarify for me.

    @jpiper- I double checked the description page for the Cowabunga system and it says stochastics heading higher for LONG trades, and stochastics heading lower for SHORT trades. I’m not sure if you misread it but as far as I know, the rule page is correct. Again to clarify, stochastics must be heading up for a long trade, and must be heading down for a short trade.

    @gabriel888- You make a good point and I like that you are looking at the overall picture. However, this system has been tested in all kinds of market conditions and while we may be catching the very end of a trend it’s still important to follow the rules to the system. We may not win as much but then again who knows if the trend is really over? We could win alot more! The system will keep you from losing too much so even if we take a string of losses, we’ll still be ok in the long run.

    @jeroenvandervelden- I don’t see why not, as long as its the same entry price or better. Just make sure you don’t enter before a news candle.

    Thanks for the comments everyone. Happy trading!

    Reply
  11. jpiper

    Dude, I understand- that was the point of my question… you quoted your system correctly- sto’s UP for long trades, DOWN for short trades. We agree on that! What I wonder about is on several of your trade descriptions that I’ve read recently, you have it the other way around, such as, for example “The 4-hour trend was down, so I only looked for short trades today. The 5 EMA had crossed below the 10 EMA, RSI was below 50, MACD was heading into negative, and stochastics were trending up, so this was a valid entry”. You wrote that it was a valid entry for a short trade with stochastics heading UP… which is not in accord with your system, which we have already agreed on above says that for short trades the sto’s should be going down.
    So, what happened?

    Reply
  12. jpiper

    Dude, I understand- that was the point of my question… you quoted your system correctly- sto’s UP for long trades, DOWN for short trades. We agree on that! What I wonder about is on several of your trade descriptions that I’ve read recently, you have it the other way around, such as, for example “The 4-hour trend was down, so I only looked for short trades today. The 5 EMA had crossed below the 10 EMA, RSI was below 50, MACD was heading into negative, and stochastics were trending up, so this was a valid entry”. You wrote that it was a valid entry for a short trade with stochastics heading UP… which is not in accord with your system, which we have already agreed on above says that for short trades the sto’s should be going down.
    So, what happened?

    Reply
  13. Drumpip

    it was a typo.. he said it in the video.” Sto’s heading down.” no biggy. thanks for the vids pipsurfer

    Reply
  14. Drumpip

    it was a typo.. he said it in the video.” Sto’s heading down.” no biggy. thanks for the vids pipsurfer

    Reply

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